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Industry faces critical challenge over new pricing model

Research carried out by UK firm Freshfields Bruckhaus Deringer has found that almost half of mobile industry executives want a new pricing model for mobile phone tariffs. Respondents to the survey believed that developing this new model represented a 'critical challenge' for the mobile industry. The most popular new model mooted is tiered pricing, with 55 per cent of respondents favouring it, and 47 per cent believing the current "all you can eat" data plans were damaging opportunities to create more revenue in the market.

Natasha Good, co-head of the mobile group at Freshfields Bruckhaus Deringer, said: "With pricing positioned firmly at the heart of the solution to the mobile industry's challenges, questions remain over whether consumers will be easily weaned off flat-rate data tariffs and how long mobile operators can stave off the need for investment in new technologies and infrastructure to maintain quality levels for a new breed of data-hungry consumer."

A further argument for change comes from the belief of over a third of respondents--37 per cent--that in mature markets such as the UK application downloads will be the main source of mobile revenues within three years, exceeding both voice and video. In emerging markets on the other hand respondents disagreed, with 78 per cent seeing voice and data plans as more "commercially viable."

The survey highlighted other challenges, including the cost of funding next generation networks and making sure capacity for traffic was adequate. However, 60 per cent of respondents claimed a change to pricing would help solve these issues. "The telecoms community is tackling a twin challenge: maximising revenue from existing services to protect profit margins and managing the increasing strain on the networks. Usage-based pricing is a logical solution. It will ease current capacity issues by capping demand, contain capital expenditure requirements and potentially increase revenue," concludes Good.